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Finance Dictionary and Glossary of Investment Terms
Average Life
Definition 1.
An estimate of the number of terms to maturity, taking the possibility of early payments into account. Average life is calculated using the weighted average time to the receipt of all future cash flows.
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Definition 2.
Also referred to as the weighted-average life (WAL). The average number of years that each dollar of unpaid principal due on the mortgage remains outstanding. Average life is computed as the weighted-average time to the receipt of all future cash flows, using as the weights the dollar amounts of the principal paydowns.
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Definition 3.
The length of time that will pass before one-half of a debt obligation has been retired.
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